Ministry of Industry, Trade & Labor Office of The Chief Scientist TECHNOLOGICAL INCUBATORS PROGRAM By: Yossi Smoler Program Director Yossi.Smoler@ocs.moital.gov.il
Government Involvement Market Failure: Early stage, high risk, innovative technological enterprises, can not raise money from the private sector. Government response: Technological Incubators Program
What is a Technological Incubator? Organization that support earlystage, highly-innovative projects, that are too risky for the private sector investments
Incubator s Goal Developing innovative technological ideas into start-ups and leading them towards first round investment.
What does an Incubator offer to entrepreneurs? Appropriate facilities and infra-structure for R&D. Financing. Central administrative services (secretarial, accounting, legal, commercialization). Management & Technical assistance. Professional & Business guidance. Connectivity to potential customers, partners and investors Inter-tenant synergism.
Government Support Average budget of project: $500K Government grant: 85% of budget Incubator s investment: 15% of budget Payback: 3% royalties from revenue Support duration: 2 years Extended support to Biotech/Pharma & Clean-Tech projects Annual Government Budget to the Program: ~$50M
The Incubators Franchise Model Franchise Term: 8 years with performance based milestones Tender: 1 year before Franchise end date
Technological Incubators Program Main objective Creating new start-up companies that would not start otherwise Secondary objectives Technological transfer from research institutes to the industry Creating technological entrepreneurial culture
Technological Incubators Program (Cont.) Secondary Objectives (cont.) Providing Deal-Flow for the Venture Capital industry Creating industrial R&D activity in the peripheral regions
Program Milestones 1991: Establishment of program 2002: Initiating the Privatization Process 2005: Establishing a designated biotech incubator in Jerusalem 2008: Establishing 2 technology based industrial incubators in Haifa and Arad 2010: End of Privatization Process 2011: Reforms in the basic models of the Incubators Program 2012: Implementation of the tendering process for selecting new licensees.
Project Criteria Innovation and uniqueness. Early stage, high risk. Market potential. IP protection Management team Feasible with available resources. Individual initiative.
Projects Acceptance Process 1.Approaching an incubator. 2.Incubator s assessment. 3.Approaching the Technological Incubators Program. 4.Program s evaluation. 5.Decision of the Incubators Committee. 6.Initiating the project.
Volume of operation 24 incubators distributed across Israel: 22 technological incubators 1 technology based industrial incubators 1 biotech designated incubator Approximately 8 projects per incubator Every year 70 80 new start-up companies are established in the incubators, ~90% of them complete the incubator term
Incubators Location Haifa: Technion, LN & HiCenter Hadera: Yozmot Netanya: Targetech Tel Aviv: Lab-One & Radbiomed Ashqelon: ATI Kiryat Gat: Xenia Ofakim: OHV Beersheba: Ma ayan Ventures (Omer Park) Dimona: Rotem Ventures Sde Boker: Iris Ventures Ofakim Tel-Chai Tsemach Gush Segev Katzrin Haifa Nazareth Migdal Tsemach Ha emek Hadera Yoq neam Netanya Tel Aviv Ashqelon Jerusalem Kiryat Gat Kiryat Arba Beersheba Dimona Sde Boker Ariel Arad Upper Galilee: Meytav (Tel-Chai) Golan Heights: Meytag (Katzrin) Kinneret: Kinrot (Tsemach) Gush Segev: Misgav Nazareth: NGT Migdal Ha Emek: Ofek Yoq neam: Naiot Ariel: Incentive Kiryat Arba: Mofet B Yehuda Jerusalem: JVP, Van-Leer & Bioline Arad: Meizam Arad
Incubated Companies - Fields of Activity December 2011 Electronics 4% Cleantech 14% Medical Devices 39% ICT 31% Biotech & Pharma 12%
Government Investments VS. Private Funds Invested in Incubator Companies (Aggregate) 1991-2011 Thousand Dollars 3,750,000 3,500,000 3,250,000 3,000,000 2,750,000 2,500,000 2,250,000 2,000,000 1,750,000 1,500,000 1,250,000 1,000,000 750,000 500,000 250,000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Cumulative Government Invesments 5,100 21,600 44,980 68,560 99,560 130,660 162,160 192,760 222,591 254,158 286,308 313,440 339,460 364,673 396,126 428,915 461,760 509,389 556,419 600,803 643,980 Cumulative Private Funds 0 100 7,950 19,045 52,026 90,580 152,652 248,729 342,260 645,705 762,910 847,140 932,903 1,127,845 1,303,012 1,741,701 2,174,548 2,546,047 2,868,841 3,155,837 3,445,773
Highlights The incubators program is the primary Manufacturer of start-ups in Israel The incubators program is the only opportunity for early-stage, high-risk innovative projects that are not yet able to raise money from the private sector The incubators program is an important source of deal-flow for the venture capital industry
Highlights (Cont.) The incubators program is especially important in times of economic crisis The incubators program has a significant impact on the life-science industry in Israel The incubators program has a crucial role in developing an entrepreneurship culture in Israel